Norwall Company’s flexible budget for manufacturing overhead (in condensed form) is given below:

The following information is available for a recent period:
1. A denominator activity of 60,000 machine-hours is used to compute the predetermined overhead rate.
2. At the 60,000 standard machine-hours level of activity, the company should produce 40,000 units of product.
3. The company’s actual operating results were:

Required
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
2. Compute the standard hours allowed for the actual production.
3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.

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Overhead costs Variable costs Fixed costs Total overhead cost Cost formula (per machine-hour) £3 50,000 £150,000 300,000 £450,000 Machine-hours 60,000 £180,000 300,000 £480,000 70,000 £210,000 300,000 £510,000